* Agreement could be signed next week -sources
* Novatek has been lobbying for gas exporting rights
* Yamal LNG to be launched in 2015-2016
(Adds details, share price)
By Darya Korsunskaya, Vladimir Soldatkin and Denis Pinchuk
MOSCOW, June 13 China's Sinopec is negotiating
to join a $20 billion liquefied natural gas project run by
Russia's Novatek, a source close to the talks said,
which would be the biggest foray yet by a Chinese firm into
An agreement, which could be signed as early as next week,
would deal a blow to Russian state-controlled gas exporter
Gazprom, which has yet to reach a supply deal with
China and is being challenged by Russian rivals, who want the
government to end its export monopoly for LNG.
Novatek currently owns 80 percent and France's Total
20 percent of the Yamal LNG project, which aims to
start production in 2015-2016 and produce 15 million tonnes per
year by 2018.
The size of the stake that Sinopec may acquire is not yet
clear. Spokesmen both for Novatek and Sinopec declined to
A senior source in Moscow said that Novatek may sign an
agreement with Sinopec next week during the St. Petersburg
International Economic Forum, a major investor showcase that is
Russia's answer to the World Economic Forum in Davos.
"We are working on that with Sinopec," the source said.
A second source said that Novatek may sign a deal with a
Chinese company. He declined to disclose the name of the firm.
The Russian company has long been seeking more equity
partners in the project on the Arctic Yamal peninsula and has
said it plans to keep at least 51 percent.
Novatek's shares pared losses after the news and were down 1
percent compared with a fall of 1.5 percent by the Moscow's
broader market index.
The signing of a deal in St Petersburg would confirm that a
shift is under way in Russia, the world's largest gas-producing
Gazprom's more nimble competitors such as Novatek are
challenging its business model, based on long-term contracts to
pump supplies by pipeline to Europe.
They are willing to adopt a looser approach to gas pricing
than its longstanding contractual links to oil prices and are
lobbying for its monopoly to be lifted for LNG, potentially
opening up a new export route along Russia's Arctic coast to
China and the Asia-Pacific region.
Sinopec plans to build a 3 million tonne-per-year terminal
in east China to import LNG. China, the world's top energy user
and fourth-largest gas consumer, plans to triple its gas use by
"Novatek needs not just investors, but partners that could
market gas," said another source, who is close to the talks.
President Vladimir Putin has urged the energy industry to
push forward with projects to produce LNG as Russia risks being
displaced from the Asian market by rivals such as Qatar and
But Gazprom's status as an export agent for Yamal LNG
complicates the project and weakens Novatek's hand in securing
State oil major Rosneft also harbours plans to set
up an LNG plant in Russia's Far East with ExxonMobil and
has also been lobbying for the rights to ship LNG abroad.
"If Novatek gets exporting rights, this would be a huge
boost for the company. Everyone at Novatek is pinning high hopes
on that," the second source said.
So far, Putin, the ultimate arbiter on energy issues in
Russia, has not given a clear signal on whether he supports the
idea of scrapping the export monopoly enjoyed by Gazprom, which
plans its own eastern LNG export facility in Vladivostok.
Gazprom said on Thursday it might sell up to 49 percent of
the project to foreign companies that would commit to buying
more than half the output.
(Additional reporting by Aizhu Chen in Beijing; Editing by
Douglas Busvine and Jane Baird)